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I Want To Bet. What Are Betting Exchanges?

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Betting exchanges are sites that allow people to bet and lay bets based on the outcome of an event. It wasn’t until December 2000 that they emerged, changing the way the public could place bets.

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Betfair and Flutter were established first, with Flutter later merging with Betfair and then ceasing operation in 2002. Betfair is currently the largest betting exchange in the world today by market share. With BetDaq (also trading as Ladbrokes Exchange) coming a close second. Betting exchanges offer close to the same opportunities as regular high street bookmakers but with a few notable differences.

For instance, you can buy as well as sell the outcome of your bet. You can trade real-time throughout an event as well as trade-out to lock in profits or cut your losses (more commonly now with the arrival of cash-out).

Betting exchanges vs traditional high street bookmakers

Revenue generation

One of the most notable differences between betting exchanges and traditional bookmakers lies in the way they both generate revenue. Betting exchanges make money by charging a commission/transaction fee which is usually a percentage of the total winnings of each customer/client on each event/market. Bookmaker operators generate revenue by offering their clients shorter odds.

Bet Restrictions

Unlike traditional bookmakers, betting exchanges don’t restrict gamblers for winning too much. You can place as many bets as you want with a betting exchange provided there is one or more opposing client who is willing to match your bets. But once you win too much, or take too many special offers online, you run the risk of being severely restricted or gubbed. No more free bets and boosts, no more money to make for you!

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Winning odds

Betting exchanges usually offer better odds for winning than those offered by traditional bookmakers. Mainly because of their overheads, staff, cleaning, television licenses to watch the races/matches. But online betting exchanges allow more profiting options. If you know information like; a specific trainer has a poor record with racehorses on a particular track; such information is crucial. You can lay his runners as opposed to having to study a race and trying to pick a perfect back bet. Besides getting more options, better prices get generated at the exchange, especially on bets revolving around horse racing (I know the offers are usually more profitable). Plus betting markets are typically weak early in the morning (in regards to liquidity) which generally affects the profits you can get.

Backing and laying

Betting exchanges offer their clients/customers an opportunity back and lay the same bet. To make a bet work, you need a layer and a backer. Traditional betting usually occurs between a bookmaker and a customer where the customer backs (stakes on which outcome they think will happen and the bookmaker lays (bets that that specific outcome won’t occur). Exchanges, on the other hand, allow clients/customers to take the place of the bookmaker by enabling them to bet against the result. The Exchange don’t need to bet against your bet as other clients will do that then gets their profit from the % commission fee. Essentially the Exchange is then just the “middle man.”

In-play betting

Betting exchanges allow gamblers to place bets in-play which merely means making bets when a match or race is in progress. Traditional bookmakers don’t enable in-play betting. In typical circumstances, betting suspended before a game or race kicks off or when something occurs (red cards, yellow cards, or something less predictable).

Arbitrage Betting

Betting exchanges offer arbitrage betting or arbs. Picking up an arb is generally frowned upon since you take advantage of the bookmaker’s oversight or error. Arbing is unlike traditional betting where you wait until the market makes a move in your preferred direction for you to make a profit.

Place Betting

Apart from the fact that you can be able to lay and back bets, betting exchanges also offer place-only markets. Such markets are perfect for horse racing bets as they allow gamblers to oppose or back a horse. Place betting, you don’t need to pick a horse and decide to back it to win or lose/each way. You can back a horse “place only” or even lay the horse you don’t like for a place. With traditional bookmarkers, the only way to bet against a horse is to bet on the others running.

Hopefully, that’s whetted your appetite, giving you a head start to matched betting. If not, have a quick read of “5 Facts About Matched Betting Everyone Thinks Is True” and see if it changes your mind.

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